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Dynegy said Tuesday that its shareholders rejected a $603 million takeover bid from an affiliate of private-equity firm The Blackstone Group (BX).

The power-plant owner said it expects to start seeking bids from other potential buyers and to review other restructuring options.

That could open the door for either billionaire investor Carl Icahn or Seneca Capital, each prominent shareholders in Dynegy, to make bids for the Houston company.

Dynegy shares fell 14 cents, or 2.7%, to close at $5 before news of the outcome was released. They dropped another 10 cents, or 2%, to $4.90 in aftermarket trading.

The company didn't disclose the preliminary vote count. It said tabulating the final results could take two weeks.

Expected Rejection

Dynegy had expected the rejection of Blackstone's $5-per-share bid, and said the buyout firm said it would withdraw its offer after a losing vote.

Dynegy's board on Tuesday also announced that it had adopted a stock rights plan that would prevent a takeover by giving existing shareholders a discount to buy more stock.

The company said the plan is designed to stop a person from taking control of the company without paying a premium to existing shareholders. The board has determined that Icahn and Seneca Capital have holdings that seek to change or influence control of the company, Dynegy's statement said.

Blackstone last week increased its offer for the Houston power plant owner by 11% to $5 per share, but Icahn said he would oppose the deal because it undervalues the company. Icahn owns a nearly 13% stake in Dynegy.

Seneca Capital, which controls 9.3% of Dynegy's voting common shares, also called on other shareholders to reject the sweetened deal. In a statement, the group said it thinks Dynegy is worth $6 per share and would be valued at $16 to $18 per share when the U.S. economy recovers.

Both Icahn and Seneca contend that the $16.3 million breakup fee Dynegy has agreed to pay Blackstone if the deal fails has discouraged other offers.

Power Player

Dynegy owns power plants around the country and sells electricity mostly to wholesale markets in New York, California and the Midwest.

The company said Tuesday that its financial advisers, Goldman Sachs (GSF) and Greenhill (GHL) will contact a broad range of potential buyers, including Seneca Capital and Icahn Associates (IEP). It said it will not disclose developments until its board has approved a deal.

The board appointed a committee to oversee the search for buyers and said it will talk with Seneca Capital about adding a director to the board and the committee.

"We will immediately engage interested parties, including Seneca Capital and Icahn Associates, who may have an interest in making an offer to acquire Dynegy," CEO Bruce Williamson said in a statement. "We look forward to maintaining an open and productive dialogue with our stockholders and believe the steps being taken by the Dynegy board make it clear that we are continuing to actively work to enhance stockholder value."

The company also said it will hire an independent financial restructuring adviser.